Revisiting Financial Stewardship Article: The Importance of Keeping Asset Owners Fully Funded
In 2012, Stephen Campisi and I penned an article for The Journal of Performance Measurement titled “Getting to the Heart of Investing: Financial Stewardship That Meets Client Objectives.” The article emphasizes the crucial role of performance professionals as fiduciaries and highlights their responsibility to act in the best interest of their clients. We critique the narrow focus on individual investment products and benchmarks and advocate for a broader perspective that considers the overall portfolio and client goals. The article underscores the importance of loyalty, prudence, and diligence in financial stewardship, urging professionals to prioritize client objectives over mere performance metrics. We also discuss the pension crisis, advocating for a Liability Driven Investment (LDI) approach along with Cash Flow Matching (CFM) to align assets with liabilities, thus reducing risks and ensuring long-term financial stability.